This indicator developed by Alexander Elder aims to measure the strength of bulls in each rise and that of the bears in each decline, all combining with the pattern of price changes, its magnitude, as well as the magnitude of volumes.

The formula:

FI( t ) = V( t ) * ( C( t ) - C( t - 1 ) )

FIS( ) = Exponential Smoothing of FI( ) to NP.

where:

FI( t ) = pure force index of the current day

FIS( ) = force index with Exponential Smoothing

V( t ) = today's volumes

C( t ) = today's closing

C( t - 1 ) = yesterday's closing

NP = number of periods (single parameter of the indicator)

Two warnings when using this indicator:

1) It's preferable to draw the Force Index as a histogram;

2) Moving Averages can be added to the Force Index to help generate signals; it is preferable to choose an exponential moving average at 2 days, as well as on the one at 13 days: the first one provides excellent levels of input and output, the second one allows you to highlight the long-term trend changes.

Prices moving above the zero-line are seen as positive or could begin a bullish move, while prices moving below the zero-line are seen as negative or could be beginning a bearish move.